Why teaching financial management is important in school

By Davider Narang

Financial management is an art of managing financial situations responsibly to achieve financial independence. The National Center for Financial Education in 2019 conducted a survey and said that only 27% of Indians had financial literacy. Financial experts agree that even though people have a lot more money today than generations ago, the amount of knowledge about how to manage that money hasn’t kept pace. This leads to the idea that the art of money management should be taught to every child. It is important to develop a thorough understanding of financial literacy from an early age, to ensure adequate money management skills later in life.

The Organization for Economic Co-operation and Development (OECD) defines financial literacy as a combination of financial awareness, knowledge, skills, attitude and behavior necessary to make sound financial decisions and ultimately achieve individual financial well-being. Elementary school is a fantastic time to teach children the importance and value of earning and saving money. Teaching financial management in schools can help children develop financial management skills, which will allow them to build a solid foundation of lasting financial skills. The process of money management training can be started when toddlers first learn to count by parents and guardians who are the primary educators.

Schools play a vital role in the financial education of children by introducing some basic conceptual programs from entry level to secondary education. Unless the students of the school are given the right opportunity as early as high school, they are also destined to face tough times financially. A financial planning course as part of their school curriculum at an early age could significantly improve their knowledge of some, if not all, of the financial products available to save money while ensuring that when these children become adults, they will have a increased familiarity with matters of financial importance. The integration of financial knowledge into the existing curriculum and to make learning more relevant, as students will be able to:

Developing an understanding of spending and saving fosters the desire to save money in students. Also, it encourages students to use a budget when deciding how much money to save and spend.

Learn about saving money, setting savings goals, opportunity cost and segregation, and finding out what it takes to reach a savings goal.

Children will be much more capable of making critical financial decisions knowing how money works throughout their adult lives.

Ability to calculate returns on invested money through simple and compound interest calculations.

Introducing financial education at an early age and continuing it throughout schooling will help create financially literate individuals, which in turn will transform the future citizens of our country into a financially savvy population. , which will allow them to make rational financial decisions.

When children are aware of money management concepts, they can influence their family by sharing knowledge about the importance of saving and taking the necessary steps to better manage their money. Thus, the dissemination of the concept of financial literacy in school education and the financial awareness of schoolchildren can be of great help.

It is therefore crucial that financial education is introduced from the local level, as it is undoubtedly an essential skill in life.

The author is Professor, Director at Jaipuria Institute of Management, Ghaziabad. Views are personal.

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Geraldine L. Melton